US Market Open: Tentative trade ahead of Bessent speech; NQ underperforms, USD and USTs firmer

US Treasury Secretary Bessent wrote in the FT that economic D-Day is coming for Iran, and countries that calculate appeasement of the regime to be a safer choice should reconsider.
Iran warned, "If the economic war continues, not a single drop of oil will be exported٫ neither through the Strait of Hormuz nor from anywhere in the Persian Gulf.”
Crude is subdued amid a lack of major weekend escalations, eyes on Bessent’s presser, who is set to unveil Iran sanctions.
European bourses trade tentatively; US equity futures are indicative of a weaker open, with underperformance in the NQ.
DXY is firmer, holding around the 99.00 mark; CAD underperforms as trade talks with the US collapsed on Friday.
Looking ahead, highlights include Mexican Inflation (Aug), US Chicago Fed National Activity Index (Jul), and comments from US Treasury Secretary Bessent. Earnings from Xpeng & PDD.

As of 10:30 BST / 05:30 EDT

LOOKING AHEAD

Looking ahead, highlights include Mexican Inflation (Aug), US Chicago Fed National Activity Index (Jul), and comments from US Treasury Secretary Bessent. Earnings from Xpeng & PDD.
Click here for the Week Ahead preview

EUROPEAN TRADE

EQUITIES

European bourses (STOXX 600 +0.1%) kicked off the trading week on the backfoot. However, as the morning progressed sentiment has picked up off worst levels to currently trade with a slight positive bias.
European sectors hold a slight positive bias. Basic Resources leads, buoyed by gains in underlying metals prices; Travel & Leisure benefits from lower energy prices and Media completes the top three. Autos reside at the top of the pile, joined closely by Healthcare and Tech.
Key movers: Evolution (+1%) rejects Candle Lake’s SEK 695/shr offer, saying it does not reflect fair market value. Shell (-0.2%) fairs a touch better vs peers (BP/TotalEnergies -0.9%). Focus has been on an FT sources piece, which noted that Shell draws interest from bidders for its USD 8bln US chemicals assets. However, the piece highlighted that the USD 8bln valuation would be a "steep discount" to the amount that Shell had invested in its US chemicals facilities.
US equity futures (ES -0.2% NQ -0.7% RTY -0.1%) are trading in the red, with clear underperformance in the NQ. The tech-heavy index appears to follow the poor performance seen in APAC trade overnight, where the likes of Kioxia (-6.7%), SK Hynix (-3.4%) and Samsung Electronics (-8.7%) all extended lower. In the pre-market, Alibaba (-3.4%) moves lower after announcing a USD 10.2bln share placement, whilst Michael Burry sold his Alibaba shares to build a larger stake in JD.com.

FX

USD is firmer against all G10 peers to varying degrees, with moves vs CAD most pronounced after trade updates. DXY is at session highs just above 99.00 after breaking out of 98.90 resistance, the next level is the 200DMA @ 99.17.
A lot of focus on USD “debasement” after alternative assets BTC and Gold outperformed last week, the market today is clawing back some of these losses with DXY edging higher and BTC off Friday's highs, however gold is firmer, potentially signalling a haven bid with global equities mostly weaker. In terms of developments over the weekend, Bessent wrote a hawkish FT piece, while Iran returned the language noting "not a single drop of oil" would leave the Persian Gulf. On that note, we expect Bessent to explain the latest sanctions in a presser this evening. Oil is not convinced by these developments with Brent down ~1%. A busy week ahead sees PCE, GDP, and Nvidia earnings hit Wednesday; Jackson Hole and US supply data land Thursday. Friday brings the NFP Annual Revision Prelim and remarks from Fed Chair Warsh. While we do not have a specific time yet, Bessent could also announce “increased focus on fiscal consolidation”; which most desks have been sceptical on over the past week.
CAD is the clear G10 underperformer after the unexpected breakdown of trade negotiations between the US and Canada, with the latter imposing dollar-for-dollar 50% tariffs on US goods. To remind, the updates we had on Friday said that their respective trade officials would meet in Washington to finalise the deal. USD/CAD looks to return to the 200DMA which it fell beneath on Wednesday, however a renewed trade war could lead to some USD weakness. MUFG reckons the CAD sell-off does not have legs, noting it targets just 5% of Canada’s exports.
Action elsewhere is quiet, Antipodeans are lower amid the risk tone, AUD/NZD +0.1%, supported at 1.20, Scandis are also weaker with NOK suffering from the dull tone and weaker oil prices, while EUR/USD and GBP/USD are a touch weaker against the Buck around 1.1660 and 1.3630 respectively.
PBoC injected CNY 340bln via 7-day reverse repos with the rate maintained at 1.40%.

FIXED INCOME

A modestly firmer start to the week for fixed income. Today, the docket is dominated by US Treasury Secretary Bessent on Iran at 19:00BST, a speech followed by a Q&A which will likely feature questions on last week’s long-end intervention.
As it stands, USTs are at the upper-end of 108-08+ to 108-15 parameters. Despite the action taken to essentially pullback long-end yields last Wednesday, USTs themselves are towards the lower-end of that week’s 108-07+ to 108-30 parameters. Given this, Bessent may give commentary to verbally support the action taken.
Note, the week also features the BLS preliminary benchmark revision, where any downward revision could knock the Fed from its assessment around the labour market; at the July FOMC, Chair Warsh described it as “solid”, “steady” and “more or less at equilibrium”, commentary that underscored the near-term focus on inflation over jobs. An update is also due from Warsh at Jackson Hole on Friday. However, given his distaste for forward guidance, it remains to be seen whether he will materially update on the economy and/or monetary situation.
From a yield perspective, the US 10yr is holding around 4.71%, in the upper half of last week’s 4.63-4.75% band. For the 30yr, the same picture, currently around 5.25% vs 5.17-5.34% from last week.
EGBs also bid, but only modestly. Europe is partaking in the Coalition of the Willing meeting in Kyiv, though the French and German leaders are remote due to a Saudi Arabia meeting and domestic political matters, respectively. Currently, Bunds are firmer by around 10 ticks and holding just below the 124.00 handle, toward the mid-point of last week’s 123.60 to 124.44 parameters.
Gilts in-fitting, UK specifics light as the focus is on Ukraine and, more pertinently, the above US events. Note, the UK is set to pledge missile support to Ukraine, the financial details of which could be pertinent to the benchmark. As above, Gilts are firmer by about 10 ticks in c. 30 tick parameters, within last week’s 85.81 to 86.73 band.
Caterpillar (CAT) files to sell EUR denominated 2yr FRN and 3yr noted. 2yr FRN guidance seen +55-60bps to 3m Euribor. 3yr noted seen MS +65bps.
Japan sold JPY 250bln in 10yr Climate Transition Bonds b/c 3.51 (Prev. 3.42). Price at the highest accepted yield 99.46 (prev. 99.17). Highest accepted yield 2.863% (Prev. 2.195%).

COMMODITIES

The weekend lacked any major updates. Focus is on US Treasury Secretary Bessent’s update later today at 14:00 EDT (19:00 BST). Market focus will be on the promised escalation of sanctions against Iran and further details regarding last week’s Treasury action at the long end. On Iran, focus will be on secondary sanctions, possible action against major Chinese entities and any retaliation through the Strait of Hormuz. Tehran has threatened to prevent oil exports from leaving the Persian Gulf if the pressure continues (Full preview available at 07:40 BST on the Newsquawk feed). Notable updates today include separate visits by the Omani foreign minister and Pakistani army chief to Tehran, with the latter reportedly speaking to US President Trump before his visit to Iran. Further, UKMTO reported an incident near Yanbu, Saudi Arabia, which prompted modest upticks in crude. As a reminder, the Yemeni Houthis recently expanded their "blockade-for-blockade" policy against Saudi Arabia to the northern Red Sea.
WTI Oct and Brent Nov futures remain softer but off lows, with the former within USD 84.69-86.57/bbl (vs Friday’s 85.80-87.51/bbl range) and the latter towards the middle of a USD 90.30-92.06/bbl range (vs Friday’s 91.15-92.98/bbl range). Dutch TTF bucks the trend and trades firmer by ~1% intraday at the time of writing, buoyed by European storage replenishment ahead of winter, with the front-month contract trading on either side of EUR 66/MWh.
Precious metals are mixed whilst DXY remains firmer following its recent selloff, and notwithstanding lower energy prices and yields today. Spot gold is higher in tandem with the Buck and bonds, which could potentially suggest some haven positioning ahead of this week’s risk events and the aforementioned Bessent announcement at 19:00 BST, with the yellow metal currently in a USD 4,594-4,660/oz range. Spot silver is flat/slow but found support this morning at its 100 DMA (USD 68.41/oz) but remains within Friday’s USD 67.91-70.02/oz range.
Base metals are similarly mixed and relatively resilient to the firmer Buck, with the complex continuing to be underpinned by hopes of Chinese stimulus following a recent string of disappointing Chinese data, in turn triggering widespread market expectation that Beijing will have to deploy aggressive stimulus to meet its annual targets. 3M LME copper resides towards the upper end of a narrow USD 14,141.60- 14,279.78/t range.
Sinopec (600028 CH) executive said it is very likely that China oil demand peaked last year.
An unusual fire alert was detected near Iraq’s Kirkuk oil field (450k BPD) with an intense thermal anomaly recorded 21 km away at 07:18 UTC.
Norway said it will proceed with development of its Barents Sea oil and gas reserves, regardless of the EU's proposed Arctic drilling moratorium.
Thailand's Finance Ministry considers taxing gold transactions in which it will consider a tax on gold trade and gold imports, while it will discuss tax with the Gold Association this week. said:. - Gold tax is aimed at curbing illicit funds and there is no plan for a high gold tax.

TRADE/TARIFFS

Trade discussions between the US and Canada collapsed on Friday partly due to a last-minute stand-off regarding cutting US tariffs on Canadian medium and heavy-duty vehicles, according to people familiar with the matter cited by Bloomberg. This means the 50% US tariffs on some Canadian goods have taken effect, while Canadian PM Carney vowed to retaliate by matching tariffs dollar for dollar on US goods from September 8th.
Canadian PM Carney said Canada was in a trade war with the US and that President Trump "miscalculated" by escalating his tariff attack, according to FT.
US Transportation Secretary Duffy said Canadian PM Carney is going to “come to the table” on trade because tariffs will be “devastating”, while he suggested Canada is foolish to think it could win a trade war with US President Trump.
Canada sees a long trade war with the US that could last beyond the Midterms.

NOTABLE EUROPEAN HEADLINES

French Economy Minister Lescure said it is not easy to cut taxes on large companies.

CENTRAL BANKS

Fed’s Kashkari (2026 voter, hawkish dissenter) said the Treasury market is functioning as it should and that the recent surge is unlikely to impact monetary policy deliberations.
ECB's Cipollone said that monetary policy needs to be well calibrated; inflation is far from adverse & severe scenarios. No signs pointing to a scenario of stagflation.
SNB Sight Deposits w/e Aug 21st (CHF): Domestic 437.11bln (prev. 433.52bln), Total 462.66bln (prev. 458.75bln).

NOTABLE US HEADLINES

US President Trump said in a pre-taped interview on 77 WABC that communities not taking data centres are making mistakes and that data centres provide tremendous amount of jobs and money. said:. Chinese President Xi comes to the White House, we'll be using the East Room.

GEOPOLITICS

RUSSIA-UKRAINE

US administration officials, including Witkoff and Kushner, are now no longer expected in Ukraine, Politico reported.
Russia said its forces struck a tanker carrying fuel near Ukraine's Odessa.
UK PM Burnham arrived in Kyiv, Ukraine on Monday morning.
South Korea said that North Korea is preparing further Russia troop deployments, although no sign of an imminent move.
Russia repels a drone attack on an industrial zone of Nevinnomyssk in southern Stavropol region, according to the governor.

MIDDLE EAST

US Treasury Secretary Bessent writes in FT that economic D-Day is coming for Iran, and countries that calculate appeasement of the regime to be a safer choice should reconsider. said:. "At dawn begins an economic D-Day — the single greatest financial offensive ever marshalled against an adversary.". "Those who sever Iran’s remaining financial and commercial connectivity will reinvigorate their own. They will deepen their access to global capital, reinforce confidence in their markets and attain the standing they seek in the world economy.". "The alternative for those who tether themselves to Tehran is the foreclosure of any path to lasting prosperity...And any nation that serves as a financial artery of a withering regime should expect to share in its isolation."
US President Trump said on Friday that Washington was observing what happens in the conflict with Iran, and he reiterated a warning against any country that provides a lifeline to Iran, while he said Iran would love to make a deal but isn’t ready to make the right deal in his opinion.
UKMTO has received a report of an incident 63NM west of Yanbu, Saudi Arabia; tanker was struck by an unknown projectile.
Pakistan's Army Chef Munir spoke with US President Trump ahead of his visit to Tehran, according to Pakistani sources.
The Pakistan Army Chief Field Marshal Syed Asim Munir left Islamabad for Tehran a few minutes ago to meet with high-ranking officials of Iran, ISNA reported citing sources.
Iranian Foreign Ministry Spokesperson Baghaei criticised a looming US announcement of sanctions on Iran, which he said was an assertion of extraterritorial sovereignty over independent member states of the UN and that such secondary sanctions have no foundation in international law.
Iranian Parliamentary Speaker Ghalibaf said they have received messages from neighbours about forming new security arrangements and economic cooperation, while he also stated that the US has put its allies at such risk through bullying and pure disregard of their interests for the sake of Israel that they briefly saw their entire existence on the line.
Iran’s Foreign Ministry said the security of the Strait of Hormuz will be discussed during the Omani foreign minister’s visit, Al Arabiya reported. Adds, they would strike at any source of aggression.
Iran’s Persian Gulf Strait Authority said vessels violating Iran’s rules for passage through the Strait of Hormuz could face fines, detention, or confiscation.
Iran's Foreign Ministry spokesperson said Oman's Foreign Minister will visit Tehran on Tuesday as part of ongoing consultations regarding maritime security and freedom of navigation in the Strait of Hormuz.
Iran's Foreign Minister Araghchi noted in Etelaat newspaper regarding new perspective on the horizon of Iran-China strategic partnership, stating they have been friends in difficult times and have many capabilities to strengthen friendship and cooperation.
Iran's Persian Gulf Strait Authority issues new rules for ships transiting through the Strait of Hormuz and warns vessels that violate Iranian protocols could face restrictions on subsequent voyages, including fines, detention or seizure. Cargo owners are being told to check Iran's non-compliant vessels list before chartering ships, while any vessel conducting ship-to-ship transfers or other transactions with a blacklisted vessel will itself be added to the list.
Iranian Foreign Ministry spokesperson Baghaei said the Omani foreign minister’s visit to Tehran is not linked to the Pakistani army chief’s visit.
Yemen’s armed forces launched several missiles toward Saudi Arabia, while a powerful explosion was heard at a headquarters of Saudi-linked militias in the southern Yemeni city of Aden, ISNA reported.
Israel conducts an airstrike on the central Gaza Strip, according to Al Arabiya.
Shipping data showed fewer than 20 commodity vessels transited the Strait of Hormuz over the weekend.

CRYPTO

Bitcoin is a little firmer this morning and trades just above the USD 77k mark, whilst Ethereum also moves higher and edges towards USD 2.5k.

APAC TRADE

APAC stocks traded mixed, albeit with a mostly negative bias amid a US-Canada trade war and following quiet geopolitical headlines over the weekend, while participants await this week's key events, including the US announcing the 'toughest sanctions in history' against Iran later, in what is described as economic D-Day, NVIDIA earnings due mid-week and the Jackson Hole Symposium on August 27th-29th.
ASX 200 was higher amid strength in the mining, materials, resources and tech sectors, while participants digested another deluge of earnings releases from Australian companies.
Nikkei 225 was choppy and traded on both sides of the 66,000 level amid strength in the heavy industries, while tech-related stocks lagged with Kioxia and SoftBank among the worst hit.
KOSPI underperformed amid weakness in its tech giants, with Samsung Electronics and affiliates suffering heavy losses despite the recent announcement of its largest-ever shareholder return plan.
Hang Seng and Shanghai Comp were pressured amid selling in tech, with Alibaba suffering heavily after it announced a USD 10bln Hong Kong share sale, while 'Big Short's' Michael Burry said he sold his Alibaba shares to build a large position in JD.com (9618 HK) and suggested Alibaba was overvalued.

NOTABLE APAC DATA RECAP

New Zealand Retail Sales (Q2 YY) 3.3% (Prev. 4.5%).
New Zealand Retail Sales (Q2 QQ) -0.5% vs. Exp. 0.1% (Prev. 0.9%).

NOTABLE APAC EQUITY HEADLINES

South Korean President Lee is said to be expected to meet Samsung Electronics (005930 KS) Chairman this week for possible talks on major semiconductor and AI investment projects, Yonhap sources say.
SoftBank (9984 JT) plans a JPY 1tln retail bond sale, according to Bloomberg.
Shein offers HK IPO shares at HKD 47.60-49.50/shr with total number of shares at 280mln Class B shares, while total number of shares under global offering is 252mln Class B shares. Hong Kong public offering period will begin at 09:00 am local time on August 24th and end at 12:00 noon on August 27th. Final offer price will be announced no later than 23:00 pm on August 31st.